Hello,

I have a question I hope you can help me with. A friend has a deal that is set to close around Jan. 4. It's a large cash deal, and if it closes before the end of the year my friend will save lots $$$$ of money on the split with the broker.

Is there any way my friend could get paid before the deal closes? If they close in escrow could my friend be paid out of escrow? Would it be wrong for my friend to ask my client to pay me before the end of the year?

Any advice is extremely appreciated.

I'm so glad my split doesn't reset every January. Sucks to work hard all year long only to end back up at the bottom again with the new year!

Sorry, I don't have anything to contribute except to say - I would doubt that it could be done...at least in PA, the licensee can ONLY be paid by the broker. And it's obviously in the broker's best interest to make her wait till January.

:-(

Chances are the broker would not have the funds to pay your friend anyway since they get paid from the closing as well.

What if for some reason it doesn't close and your friends gets paid in advance, spends the money, and the deal doesn't close then?

You can ask but typically commissions are earned upon a successful closing.

Depending on how her broker would handle a commission advance, she could try that. There are tons of companies out there who do that, but their fees (around 10%) may negate what she is trying to accomplish.

Generally, commissions are paid at settlement, but there is nothing in the law that would preclude you from being paid in advance.

It strikes me as odd that someone wants those on the board to figure a way around their contract with their broker. . .

Actually, I agree! You have to pay the piper sometime!

I think your "friend" needs to just accept the closing date as proposed and let the chips fall where they may...a deal is a deal.

maybe your friend should look at going to a brokerage that doesn't reset the commission structure every year?

I think your friend made their bed when they went to work for their broker and now it is time to lay in it. If they are unhappy with their split they should renegotiate it or move on.

Tell them to do the friggin' deal and quit acting like the reason that so many people hate realtors...greed. Youre gonna do the deal or not. Sooner or later in your career youre gonna have this sort of thing happen if youre working with a resetting split. We have an agent who did a 2 million deal and hadn't "capped" so he had to split about 27 percent to the broker. A few months later and he would have kept it all. The cookie crumbles. She can always go to a 100% broker if she can afford to.

The broker might actually give a commission advance but it would probably be based on what the split would be at the closing! Therefore...if the broker is smart, he or she would only give what the agent is entitled to as per their contract.

If I were your friend I would ask to renegotiate that January reset. My office doesn't do that - you split is based on your performance and doesn't reset unless you stop producing.

The commission advance I was talking about was not through the broker, but through companies like Agents Advance. They are like paycheck lenders. You can get advances with a ratified contract or a listing agreement for a fee. It still passes through the broker for payment to the agent (if that is what is required by law).

Not that I am recommending that. Just providing information....

I'm still really confused about the "Would it be wrong for my friend to ask my client to pay me before the end of the year?" comment. I can't tell who's who.

-jeff

somehow, I think that perhaps the OP is actually the agent in question - started out as an imaginary third person, that got confused.

Even so, it wouldn't help in this situation. It's not that the agent wants the commission "early" for the sake of getting it faster, but wants the commission early because after the first of the year the commission split will drastically change. It would not alter the commission split to be in the agent's favor - if she got an advance, she'd still have to take the lower split, because the advance would be based on what she actually has coming to her.

Can you imagine getting advanced the commission and then spend it... At the last minute the lender decides not to lend for what ever reason, or the buyer finds an incredible deal done the street which makes the deposit look like chunk change?

Here in Southern California, their are builders that will refund you your deposit that you have on another home so that you go ahead with a purchase in their developement...

Just ride it out and pray that it closes, risky any other way...

It's "chump change."

And the fine print allows you to substitute another contract in its place or repay in a certain amount of time in the event your deal falls through. Shouldn't be a problem if the original poster is truly concerned about saving split, not in a bind financially.

Additionally, the split would be based on whatever the broker decides it is, Perky. Mine would base it on the current situation, as it would be income at that point in time. Not at the time of closing. Everyone's deal is different and we can't apply our situation to theirs. I do see your line of reasoning, though.

the broker already said what the commission would be - in the agreement that the agent signed when joining the broker's agency. Duh, I know the broker decides - that's what the contract is all about.

I fail to see how getting an advance would make the broker decide to give a higher split, just because the agent went to get money before closing!

I am going to let you win. I could explain it in legal terms, but I don't have the energy, and you want it worse than I do.

I really doubt if Perky wants it more than you do. I would be more inclinded to think that she just doesn't understand how it could happen, and she's probably like most of us -- if there's something we don't know we would like to know.

It sounds like you are saying that fuze's friend could get a commission advance from an outside company. If that's the case then the way I understand it, and probably the way Perky understands it, is that when the sale closed the broker would pay the outside company only the actual commission that was due under the broker's agreent with the agent, and the friend would still owe the outside company the difference.

If you know some other way of this happening then I think we would all like to know.

I'm not trying to "win" anything. I fail to comprehend how getting an outside company to advance the commission to the agent is going to get the agent the higher split.

Sheesh, lighten up. It's not some kind of debate I'm trying to win.

Ben explained it very well in his post above.

If it were me, I'd sit down with my broker and basically ask for the more advantageous commission split on the grounds that it's so dang close to the rollover point. I bet most brokers would say, good job, keep it up, sure no problem!

Other than that I don't see how getting it early, through an advance, solves anything.

Hey, just be happy you (or your friend, or your client, or whomever it is <g>) is getting a commission right now! Uh-"that'd be cool!"

-jeff

SIMPLE VERSION: Say commission is $3K. Agent gets advance of $1K. Check paid to broker who signed the agreement with advance provider (AP) less fees, say $900. Broker pays agent their current split of $900 (if 90/10 then agent would get $810 since the income is paid under agreement for the time at which it is received. Closing date does not come into play legally speaking. It has nothing to do with the Broker Rep Agreement). $1K is filed like a lien on the transaction commission with title company to be paid prior to commission check being issued at closing.

At closing, AP gets their $1K from the title company. Broker gets check for $2K, and then issues agent their current split.

Income is split according to when it is received by the broker, not when it is closed. At least legally, it would work that way unless the Broker Representation Agreement states otherwise and if that is the case, it could likely be challenged. There are so many versions of BRAs that there is no way to know how the subject of this post has things set up.

Hope this helps a little, Ben, but it's the short version - I'm swamped!

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